"We hope that after August 15, we'll be able to analyze the content and then bring it to our Professional Ethics Executive Committee (PEEC) for approval in the first quarter of 2014," Ellen Goria, a senior manager in the AICPA Professional Ethics Division, told AccountingWEB.

It is expected that the code will go into effect on December 15, 2014; however, the effective date may be delayed a year so members and firms can update their policy or internal manuals, Goria adds.

The intent of the initiative, which started in December 2008, was maintaining the substance of the existing AICPA ethics standards, while identifying areas that needed revision. There were several key objectives of the project, including:

Restructuring the ethics code into several parts that were organized by topic.

Editing the code using consistent drafting and style conventions.

Incorporating a conceptual framework for members in public practice and in business.

Revising certain code provisions to reflect the conceptual framework approach, also known as the threats and safeguard approach.

"We knew it was going to be a very large project," Goria says. "Ultimately, I believe the design is going to make members' lives a lot easier because they'll be able to quickly navigate the code."

Changes Benefit Small Firms

A more organized Code of Professional Conduct should benefit smaller accounting practitioners, according to Goria. The ethics code is now restructured into four parts. The first part of the code is the preface, which is applicable to all members. The remaining three parts are divided according to a member's practice and include:

Part 1: Applicable to members in public practice.

Part 2: Applicable to members in business.

Part 3: Applicable to all other members, such as those who are retired or unemployed.

"If a person is purely a member of a public practice, they just need to look at Part 1 for guidance," Goria says. "This will help that practitioner weed out the information that wouldn't concern them."

There are also two new sections included in the proposal: Section 600, which documents what's new, has been revised, and/or is pending in the ethics code, and Section 700, which highlights what has been recently deleted from the code.

"If a smaller practice did not have dedicated resources for tracking the changes and updates to the code, it can now go to Section 600 to see what's new within the past twelve months. They can also see what has been approved by the PEEC but is pending. I have to believe this will create some efficiencies for smaller practices," Goria says. "Section 700 shows what we've deleted from the code as well as what's been superceded in the code or what's no longer relevant."

She also says small accounting firms should be aware that the AICPA Professional Ethics Division issues non-authoritative guidance, such as frequently asked questions, that will be linked to the relevant topic and appear in boxed text at the end of the applicable standard.

"Linking the guidance with the content that it relates to will definitely give the smaller and midsized firms a better understanding of the code," Goria adds.

Conceptual Framework

What might be the most significant change to the code is the incorporation of a conceptual framework for members in public practice and in business.

"We have a conceptual framework in the code today: It's limited to independence standards," Goria says. "So the biggest change is our members will now have this additional conceptual framework to use when they encounter a situation that's not addressed in the code. It will help them identify whether there are threats, if those threats are significant, and if there are safeguards that can be implemented to reduce the threat to an acceptable level."

If all safeguards have been exhausted and the ethical conflict remains unresolved, according to the AICPA Guide for Complying with Rules 102-505, "the member will in all likelihood be in noncompliance with the rules if he or she remains associated with the matter creating the conflict. Accordingly, the member may determine that, in the circumstances, it is appropriate to withdraw from the engagement team or specific assignment, or to resign altogether from the client, firm, or organization that employs the member."

How to Comment

AICPA members who would like to provide feedback on the proposed revisions to the Code of Professional Conduct can e-mail comments to Lisa Snyder, director of the AICPA Professional Ethics Division, at lsnyder@aicpa.org.